Rudolph Telscher, Counsel to Octane Fitness; Principal,
Harness Dickey PLC: the statute says “exceptional” and you start with the plain
meaning, as it was when enacted. Dictionary: Out of the ordinary: a far cry
from frivolous and subjective bad faith.The latter was essentially an impossible standard. From 2005-2011 not a
single fee award that related to the merits of the case was upheld, during a
time when we all know that lawsuits were getting weaker.Since Octane,
10 awards of fees in those few months. Already a litigation impact.

Constantine Trela, Jr., Counsel to Icon Health, Partner,
Sidley Austin LLP: Statutory question: This was in the SCt’s view an instance
where the Fed. Cir. treated patent as somehow different than regular law and
reading statutes as you wouldn’t read them in other areas. Very similar to eBay.Publicity/concern over patent trolls has had an impact.Whether that’s true is another issue but that
concern has gotten through to the Court.

Q: what effect on NPEs?

Professor David Schwartz, IIT Chicago-Kent College of Law:
On balance, made it easier to affirm findings of fee awards.Immediate narrative on NPEs is that those
with weak claims, with cost of defense settlements, would encourage defendants
to litigate rather than settle.But the
standard is not fee-shifting. Still has to be outlier/uncommon.So still a lot of pressure on accused
infringers if settlement offer is well under cost of litigation.

Perella: True, change only at the margins.

Telscher: legislative prospects?Doesn’t see loser pays legislation going
anywhere. Chilling effect on patent system of going up against a large
company.75% are small companies.Other legislation possibility: fee shifting
for NPEs unless NPE could show reasonability.That in his view is basically no different from SCt’s standard: case has
to stand out in substantive strength/weakness.

Trela: whether SCt intended to/did obviate need for legislation,
Congress will see it as at least partial solution and will take a wait and see
approach, so he wouldn’t expect a legislative return for a while.

Schwartz: not sure he agrees. Politically, proponents of reform
made fee shifting central, and these cases took some wind from sails. But
reform sought was much broader than these cases allowed. Proposal on table:
default that fees shifted unless positions were reasonably justified.
Proponents of patent reform think that’s important and will re-raise it soon.

Because of the way sj and trial are set up, there are more
opportunities for accused infringers to be the prevailing party.

Trela: Agrees: likely that courts will view Ds and Ps a bit
differently. Lack of meritorious defenses: dcts may think of willful
infringement as the solution, but no counterpart for assessing fees against
P.(Also the case before.)

Telscher: if you win at sj, for Ps and Ds it will apply
equally, but for a P who proves your case and a jury finds willful
infringement, that emboldens the judge to feel more comfortable awarding
fees.It’s far easier to get a jury to
buy into willful infringement than a judge, so that’s a P edge at actual trial.

Discussion over whether one could get fees without a sj
motion: general agreement that you could, depending on how the expert opinions
shook out, but that winning at sj was helpful.Trela noted that Judge Dyk had said that failure to move for sj is a
factor counseling against a fee award.

Q: what counts as exceptional?

Telscher: start with merits of the case. Abuse comes in two
areas: big company suing small; NPE cases.Not a troll-hater: a legit tech legitimately used in the marketplace can
justify. But in the past 10 years the goods (patents) got picked over and the
cases got weaker and weaker.More like
extortion.Cases dragged out until
defendants pay. Look at economics to explain motivation to judges.

Trela: ought to turn on weakness, not motivation.

Schwartz: district courts aren’t equally situated to
evaluate merits v. litigation misconduct.In some jurisdictions, judges see lots of patent cases, but in others,
judge might not have a sense of ordinariness.Litigation behavior is easier to evaluate for generally experienced
judges.

Trela: if the standard is whether the case stands out, what
does a new judge do?

Q: if you’re in EDTex., where many of the cases are very
weak, how could a case stand out?

Telscher: reasonable litigants. It’s not numerical.EDTex. is separate issue: pro-plaintiff
jurisdiction; you can expect it to be harder to get a fee award there.Expect more forum shopping.Has seen plaintiffs move to EDTex. to avoid
transfer.

Telscher: NDCal case from June, where judge found p had
acted unreasonably in merits and litigation conduct; ds also acted unreasonably
so judge denied fees. So be aware of your own conduct.

Schwartz: deference to dct judges in Highmark makes fee denial likely to be affirmed. Once there are
differences in districts emerging from the data, ps will move there quickly.

Trela: if there’s variation among the judges in the district
you’re taking a chance!

Telscher: reminder that the conduct doesn’t have to be
independently sanctionable to affect the fee determination.You can say: these lawyers were smart, they
didn’t cross any line, but overall their conduct merits a fee award.

Trela: judges will be looking at conduct & litigation
tactics of the other side, not necessarily to say a pox on both houses but to
see whether effort put on other side is appropriate. If you really believe case
is weak from the outset, do you need 10 lawyers and 5 experts?Those arguments will sway some judges.

Telscher: judge doesn’t have to go all or nothing. Can award
fees for one aspect of the case.Keep
billing records in condition to separate those out.

Peter Menell: may have effect on what cases are
brought.You might not be able to fund
exploratory litigation. If the issues are tied together—you have a bad validity
case, why not award fees on the infringement portion too?

Telscher: dct will always have discretion to decide whether
one issue is fatal and affects the whole case, or whether it’s just one issue.

Schwartz: treble/enhanced damages: willfulness isn’t
required by the statute. The Fed. Cir. has held that willfulness is
required.Not clear how this rule can
survive after these cases.

Q: many of these rules were promulgated a while back. Would
they be different with more former dct judges on the bench?

Trela: ct app judges sometimes lose sight of what happens in
a trial court. Fed. Cir. has that problem in spades.New judges may make a difference.But some of the problems we see come from
appellate judges w/out a good feel for trial court litigation.

Q: has a D recovered fees by killing a patent in
reexamination?If case is stayed in the
interim, judge may perceive there’s not much in fees accrued/behavior in court
so how could it be exceptional?

Telscher: If you go right to reexamination, hard to get
fees.But Octane may make the argument plausible if the case is more mature.

Q: can you get fees for P not knowing of prior art?

Telscher: once you’re in litigation D will do a much bigger
search for prior art; unreasonable to expect P to find it all for purposes of
fees.

Q: well, has been involved in case where 30-minute search
produced 35 pieces of prior art.

Creative Commons/disclaimer

Text on this blog is licensed under a Creative Commons Attribution 2.5 License. Pictures and works quoted may be subject to other parties' copyrights.
I speak for myself. On this blog, I do not and cannot speak for Georgetown Law, the Organization for Transformative Works and/or AO3.